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What is Insurance?

Insurance is a basic form of risk management which provides protection against the loss of the economic benefits that can be enjoyed from assets.These assets may be physical assets, such as buildings and machinery, or they may be human assets.Assets are subject to the risk that their ability to generate benefits could be lost or reduced due to unforeseen or unexpected events. There is a financial or economic consequence to the risk, and insurance indemnifies or protects against these consequences.For example, the ability of human beings to generate income from occupation may be affected by illness, disabilities and death; factory buildings & machinery may break down or may be destroyed leading to loss of output.The events themselves cannot be avoided. The consequences of the loss can either be borne by the person to whom the benefits accrue(risk retention) or they can be transferred to another(risk transfer). Insurance enables risk transfer from the beneficiary(insured) to the insurance company(insurer), which undertakes to indemnify the insured for the financial loss suffered. In return, the insured pays a periodic fee, called premium, to the insurer to receive this protection.To be insurable, the event being insured against, such as death, accident or fire must result in a financial loss which can be quantified and insured against. The premium payable will depend upon this expected loss and the probability of the event occurring during the period of contract.For example, the premium payable on a health policy for an individual whose parents have a history of ill - health that are considered genetic, such as ailment of heart, cancer or diabetes, is much higher than that for an individual coming from healthy stock. This is because the chance that the insurance company will be required to pay medical expenses in the first case is much higher than what it is in the second case. In the absence of insurance, the loss arising out of the event has to be borne by the person who would have otherwise enjoyed the benefit from the asset.

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What is a loan?

A loan is essentially money borrowed with a promise to return within a specific time period. The lender of the loan decides a rate of interest that the borrower must pay on the money borrowed along with the principal amount borrowed. A person can avail loans of various types to meet the funding gaps of his or her requirement. However, it is very important to know what types of loans are available for meeting a particular requirement in order to maximise the benefits and minimise the impact in terms of interest pay-out and meeting other loan requirements.

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What is mutual fund ?

A mutual fund is a trust that pools the savings of a number of investors who share a common financial goal and investments may be in shares, debt securities, money - market securities or a combination of these. Those securities are professionally managed by a fund manager on behalf of the unit holders and each investor holds a pro - rata share of the portfolio, that is, entitled to profits as well as losses. Income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. A mutual fund is the most suitable investment scope for common people as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively lower cost. Investors who may not want to invest directly in financial markets may instead get exposure to the same securities through a mutual fund. Similarly, investors can diversify their portfolio holdings even with small amounts, by investing in gold and real estate through mutual funds. An investor may choose to invest through a mutual fund to be able to use the services of the fund manager who will make the investment decisions relating to selection of securities, timing of investments, reviewing and rebalancing the portfolio periodically and executing the operational decisions related to the portfolio.These services are provided to the investor by charging a fee.

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PPF

A mutual fund is a trust that pools the savings of a number of investors who share a common financial goal and investments may be in shares, debt securities, money - market securities or a combination of these. Those securities are professionally managed by a fund manager on behalf of the unit holders and each investor holds a pro - rata share of the portfolio, that is, entitled to profits as well as losses. Income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. A mutual fund is the most suitable investment scope for common people as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively lower cost. Investors who may not want to invest directly in financial markets may instead get exposure to the same securities through a mutual fund. Similarly, investors can diversify their portfolio holdings even with small amounts, by investing in gold and real estate through mutual funds. An investor may choose to invest through a mutual fund to be able to use the services of the fund manager who will make the investment decisions relating to selection of securities, timing of investments, reviewing and rebalancing the portfolio periodically and executing the operational decisions related to the portfolio.These services are provided to the investor by charging a fee.

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Introduction to Credit Cards

A credit card is a thin rectangular piece of plastic issued by a financial company that lets cardholders to borrow funds with which users can pay for the purchase of goods and services. Credit cards work on the condition that cardholders must pay back the borrowed money, plus interest, as well as any additional agreed-upon charges. A credit card provider may also enable them to borrow money in the form of cash advances. Issuers customarily pre-set the borrowing limits, based on an individual's credit rating. Most financial companies let the customer make purchases with credit cards, making them one of the most popular payment methodologies for buying consumer goods and services.

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What is Real Estate?

Real Estate is one of the key investment option tor investorS in India. Investment in real sector is done keeping in view the appreciation in the property prices over the years and regular income like rental income Real estate investment comprises of investment in residential properties and commercial propeties for an individual investor. Growth of investment in real sector in india was fuelled by reforms in the sector bringing higher transparency in the entire process. Reforms and development in real estate financing was another key development which has made it easier for larger section of population to buy properties by availing home loans and loans for commercial properties. Investment in real estate require investor to invest higher capital compared to other investment option and investment in real estate is not a liquid investment compared to investment in stocks, mutual funds, gold or fixed deposit where an investor can withdraw the investment at any time. Returns from real estate investment depends upon the time period for which the investment is made. Generally, investment for longer duration fetch better returns.Investment in real estate when a particular area is seeing a lot of investment opportunities is likely to fetch better returns than investing in areas which where growth has already peaked. Theretore, selection of right location of property, whether residential or commercial, is another important criterion affecting returns tor such an asset. Also, the rental income for properties given on rent depends upon the importance of the locality in which property is located.Property located in areas with good infrastructure, road, rail and air connectivity, good access to water, electricity medical and other facilities is likely to give investors good rental income as well as higher appreciation in price for sale in future.However, investor may have to pay a premium while buying such a property over buying properties in areas lacking in such facilities.So, investor needs to do a lot of research and due diligence before he or she finalise the property for purchase. in order to boost the growth in the sector government has created the financial resources to fund residential and commercial projects and lot of incentives are provided to the industry tme to time.lnvestors, in particular those buying residential property, are provided tax benefits under Income Tax Act to promote purchase of residential properties. However, purchase of properties not only have cost attached with the property itself but an investor has to incur many other expenses also at the time of purchase of property.This includes registration charges, stamp duty charges, GST etc.Then there are regular maintenance charges which an investor has to pay especially of the property is part oft a housing society or commercial complex. However, investment in property do not have nsk which an investor can have while investing in stocks. Gains made in real estate are subject to capital gain tax with certain relaxation/exemption available on reinvestment or gains. Overall real estate investment i5 good investment option for investor having a lot oft surplus money or a verstable income source and for investor who is looking for diversification in his or her investment portfolio.

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What are Shares?

When you talk about investment options then you can’t complete any discussion without talking about investment in shares. There is a lot to learn about investing in shares and parallelly there is always huge demand to get the proper and authentic information about investment in shares. Reforms in the share market and technology revolution has created even bigger interest among people to invest in shares. Given the importance of shares in the investment world it is important to understand this investment process from the very beginning. Any company after its incorporation and bringing its product or services into the market need capital on regular basis to run the operation of the company and grow. Every company has various sources available to it to fund its capital requirement. Initially, it does it through internal accrual including cash from operations, capital infusion by the promoters and other associates. As the requirement for additional funds go up, it may be necessary to source funds from a wider group of investors. One of the ways to raise capital from outside investors is by offering a small portion of share in the ownership of the company to the large number of people in exchange of certain amount. They do that by the way of Initial Public Offer or what we generally call IPO. Once you apply and get allotment of shares through the IPO you become a small investor in the company that is you share the ownership of the company with all other investors. Now once the company is listed on stock exchange through IPO the shares bought by investors are tradable on secondary market where you can buy more shares or sell your existing holding. In simple terms since a share is a document certifying your ownership in a company, you can sell it to someone for a price. The number of shares held by you determines the percentage of holding you have in the company. So, if a company is worth Rs.10 crore and you hold shares worth Rs.10 lakh, then you are a 1% partner in the company. Shares are also known by other names like securities or stocks. Similarly, for companies who are already listed on the stock exchanges like NSE or BSE you can buy their shares you can buy their shares from the secondary market. Lets know more about it.

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Traditional use of Gold in India

In India, gold is seen as an asset that is suitable for long term wealth creation. It is also used as a collateral for loans and is therefore seen as an asset to fall back on when in need for funds. Indians are among the largest retail buyers of gold in the world. Traditional allocation to gold among even middle- class households may be high due to the purchase of jewellery. However, Gold jewels have limited investment value due to their high making costs, no income generating power, and limited sale to realize the gain due to the emotional attachment to jewels. Jewels are usually recycled and sold to be reinvested in new jewels. Gold is mostly bought by central banks as part of the reserves they like to keep.

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